HDFC bonds can't retain infra tag after merger: RBI
RBI) is said to have turned down a request from HDFC Bank to permit classification of securities worth more than ₹1 lakh crore issued by the erstwhile HDFC Ltd as infrastructure bonds. This would have given regulatory leeway to the country's largest private bank.
«The RBI has communicated to HDFC Bank that there is a technical hurdle in giving the infrastructure tag to bonds issued by the former HDFC Ltd because those were issued by an NBFC (non-banking finance company) and norms for treatment of bonds are different for banks and NBFCs,» a person close to the development told ET.
The RBI and HDFC Bank didn't respond to queries.
HDFC Ltd had issued the aforementioned bonds before the merger with HDFC Bank, which was effective July 2023. In the middle of last year, HDFC Bank sought Reserve Bank's permission to classify the debt with maturities between seven and 10 years as infrastructure bonds.
HDFC Ltd had about ₹1.20 lakh crore of bonds classified as infrastructure finance instruments. An infrastructure tag would give HDFC Bank relief on the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements against such debt.
RBI Norms
According to RBI norms, funds raised through long-term bonds by banks for investment in infrastructure and affordable housing are exempt from SLR and CRR requirements.
SLR, which represents the portion of deposits that banks must compulsorily park in highly liquid assets including government bonds, is currently at 18% while CRR is at 4.5% of deposits.
«The RBI has clear
